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Thursday, March 10, 2011

Against common sense

President Benigno Aquino III has committed what I would call a blunder replete with negative political and economic consequences.

I’m referring to his recent imposition of a nationwide log ban.

Not only is this policy wrong on scientific and other grounds (more on this later), but it is untimely and politically unsound because it would worsen rural unemployment and deter investments in the forestry sector at a time of rising food prices and uncertainty in the Middle East.

To recap, President Aquino imposed a nationwide log ban last month after torrential rains caused flooding in Bicol, Cebu, Negros and Butuan.He fell into the same illogical trap that his predecessor, former President Gloria Macapagal Arroyo did, when she similarly imposed a nationwide log ban after landslides caused by massive rains in Quezon in 2006.Former President Arroyo had to later lift the moratorium in the face of facts, although damage had already been done.As for PNoy, somebody must have whispered to him that in the face of government helplessness, it would be convenient to put the blame on “loggers,” legal or illegal.

The nationwide log ban will not stop the flooding because massive rains, and not cutting of trees, caused the floods.Thereis an existing log ban in Bicol, Cebu and Negros but if logging was the culprit, why were those the areas that suffered flooding?Yet, in a case of non-sequitur, PNoy decided to make the whole country suffer a log ban!

In Queensland, Australia, there is no logging, legal or illegal, yet that territory has seen massive flooding and the city of Brisbane got inundated.Even Jeddah in the desert kingdom of Saudi Arabia recently experienced floods yet tree cutting can’t be blamed for it.The simple fact is that there is climate change and that the amount of rainwater is just too much for the soil to absorb, hence the floods.

The nationwide log ban will worsen and not alleviate the problem of deforestration.

In the first place, can the government really police the forests?Even prior to the log ban, there are already policies in place that prohibit cutting by those who don’t have Integrated Forest Management Agreements and concessions.But has the government caught and prosecuted a single illegal logger?Why would a nationwide policy banning all logging, legal or illegal, be any better?

Government is the problem, and not the solution.In the sixties, seventies and early eighties, the government imposed a reforestration fee on all logging activities and told the loggers that it would be responsible for reforestration.Of course, the government never used the reforestration fee for the purpose it was intended.It got lost in graft and corruption.

And now, deforestration is being caused, not by commercial logging by the private sector, but by conversion of the forests into agricultural land.According to Dr. Rex Victor Cruz, part of the UN Team that won a Nobel Prize for its studies on climate change, the real cause of forest loss is the conversion of forest lands into agricultural lands and other purposes.

Instead of banning logging, the government should encourage the private sector to do commercial logging, but in a sustainable way.Why?Because the private sector has the profit incentive to nourish the forests and to police these from being cut and converted into agricultural land.

Why would the private sector in the forestry industry deplete its source of raw materials when that is the source of its profit?If done in a sustainable way, with rotations of cutting and replanting 25 blocksin the course of 25 years, a forest concession will live forever.

Moreover, what economists call “exclusion,” which is inherent in private property rights, will work to the benefit of the forests because the private company, motivated by self-interest, will exclude illegal loggers, poachers, and kaingeros.

Indeed, in countries like Japan, Sweden, and the United States, the concept of private property rights over the forests is being utilized to preserve the environment.

All of these are common sense, but it seems to have been abandoned by the Aquino administration because of the political “pogi” points it wanted to score with the nationwide log ban.

Instead, it has caused uncertainty in the forestry and wood sector.Who will now invest in forest plantation and management, when because of presidential whimsy, investors in the forestry sector will be deprived of their rights?

As they say in the vernacular, “sayang.”The Philippines has a competitive advantage in cultivating trees and producing forestry products because of its geographical location and favorable weather.It could be a major exporter of forestry products, as it once was, but now, it’s a major importer.

The nationwide log ban will worsen rural unemployment, affecting some two million workers dependent on the wood industry.It will create a wood shortage in industries dependent on wood, such as furniture and construction.In fact, the wood shortage will probably increase the trade in illegal logs, which the government is hapless to police. The perverse result of this nationwide log ban is probably greater forest destruction.

With his high popularity ratings, PNoy can probably shrug off the negative consequences of his knee-jerk reaction – for now.However, oil prices are skyrocketing, food prices are escalating, and OFWs are returning in high numbers from strife-torn Libya and other countries in the Middle East.Instead of measures that will help put food on the table, PNoy seems to be taking it away, if only to look good with environmental fascists.With this kind of moves, it’s doubtful if the Teflon coating will stick on him forever.

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FEF is a public advocacy organization dedicated to advancing the cause of economic and political liberty, good governance, secure and well-defined property rights, and market oriented reforms. It counts among its members former and present Cabinet secretaries and undersecretaries, leading figures in the academe, respected media personalities and opinion makers, and prominent members in the business and finance community.